In Administration (Col)

Helpful and reassuring email from ABLrate just now about their processes were administration to occur.

Let's summarise what we know so far:

• Collateral is in administration, not insolvency (so far). Positive.
  
• Administrator states Collateral will continue to trade under his supervision, but no new loans and no secondary market. Positive.
• Collateral was executing withdrawals promptly prior to administration - I made a withdrawal on Feb 19th without issue.  Positive
  
• The administrator's letter makes mention of future options - they may try to sell the platform or restructure?  Positive.
  
• The loan book has been ring-fenced and will be run down.  Investors receive capital & interest according to Collateral Ts&Cs. Positive
  
• Investors need do nothing about their loans that are drawn-down.  Just sit tight.
• Collateral changed their Ts&Cs at start of Feb, explicitly stating client monies are not held in a client account.  Very negative.
• The administrator has the email addresses of all investors on the platform which indicates a degree of database access or director cooperation. The administrators letter has been very prompt in the circumstances. Positive.
  
• The Administrator "Refresh" seems to have a name similar to who Collateral stated they had lined up as a fallback to run the loan book in case of platform failure.  If so then we might hope they made preparations for database access and record duplication before the administration commenced. Possibly positive.
  

What we don't know:

• The circumstances of the FCA interim approval lapsing. Whether & why the FCA refused to extend interim permission (or whether Collateral even applied), or whether the prior interim permission permitted Collateral to do what they were doing (if there was no client money account - which we don't know - then I have my doubts)
  
• Whether the administrator has verified the status of all loans (i.e. do they all exist or were there any fictitious borrowers where funds may have been diverted to build the platform?)
  
• Whether client money deposited before the Ts&Cs change is in a separate client account or not.  I would not be optimistic.  Money deposited after is probably in the unsecured creditor pot.
  
• The status of money to fund loans that have yet to drawdown.
• The status of interest accrued prior to administration and interest held on account for borrowers(Collateral takes interest up-front on some loans)
• Whether the administrator intends to revive the website in some form or not.
• The status of any recent cashflows (drawdowns, interest, repayments).
  

The money is in trust not secures I.e. it belongs to your if it can be identified. Money held in Collateral's client account should equal the total of the cash part of the total of everyone's account. The loan part's as they are repaid will go into, probably a new, client's account and be paid to you.

The three issues that could be of concern are

1 Collateral's records are good enough and available to the Administrators so as to identify client's money.

2 Borrowers repay their loans, traditionally in insolvency bad debts rise

3 Administrators costs,there will be few assets of Collateral's own so the fees will have to come from client's money.

<crosses fingers firmly>
I liked Collateral... Oh, well.

As far as the loan book goes, I hadn't got a note of what I'd got in what. Hmm. So let's hope that something comes out/up soon, so that we can all remind ourselves and have a think for ourselves about what and where our chances are likely to be. Ongoing dev loans with future tranches are, I'd have thought, likely to be fairly straightforward to refinance to other platforms one way or another - else those projects themselves may be at risk, which helps nobody. Portable-asset loans shouldn't be too hard, so long as they were "straight" to start with - but that's an assumption we have to make all round.

Oh, for a chance to review my portfolio...

Indeed, and much appreciated too as they are not exactly a giant either. 

I would like to see the FCA answer why they let an interim approval lapse, and if they knew about (they should have) why they let all this be handled like this - unless they are the ones that specifically said do not talk to anyone and can it now.  We all know the Directors have enough explaining to do (which I am sure they won't now), but the FCA are not smelling of roses here.   

I'd say No :-

You should see a link within the email that you click to access the letter which is on a dropbox style service.  Possible your antivirus removed it though!